Kentucky Health Insurance Practice Exam

What type of group health plan issues coverage on a one-year renewable term basis?

1. Annual fully insured

2. Conventional fully insured

3. Modified fully insured

4. Premium daily arrangement

The correct answer is: Conventional fully insured

The correct choice indicates a conventional fully insured group health plan, which is structured to provide coverage for a period of one year, with the option to renew the policy annually. This type of health insurance plan typically involves a fixed premium and benefits that are established at the outset of the policy term, ensuring that both the insured group and the insurer have clarity around coverage and expenses throughout the year. In a conventional fully insured plan, the insurance company assumes the entire risk and is responsible for paying claims, while the employer pays a set premium based on the group’s demographics and health risks. The annual renewal allows for adjustments in premium prices based on claims experience and changes in the group’s health profile, but fundamentally, the policies are designed for a defined term, typically one year. Other options present different health insurance arrangements that do not necessarily adhere to the one-year renewable structure. Each alternative may involve variations in risk-sharing, funding arrangements, or premium frequencies that deviate from the standard annual renewal format typical of conventional fully insured plans.